Covid-19 could impact on legacies via a range of quite separate mechanisms. Over the next five years, the most direct impact on the legacy market is likely to be through one or more of the following.
The average value of residual bequests is driven by economic factors, in particular house prices, share prices and GDP growth rates. These residual bequests are vital to the charity sector, making up over 80% of all legacy income. The coronavirus outbreak is likely to have a significant negative effect on the UK economy; on share prices, GDP, and quite possibly house prices too. However, these falls should be relatively short-term and will probably not stretch much beyond 2020. Looking over the five year period as a whole, we would expect house prices and share prices to show positive growth (from where we were at the end of 2019); average legacy values are therefore likely to continue increasing over the forecast period overall – even though there is likely to be a severe short-term shock in 2020.